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Let's accept your premise. Assume the USA lowers taxes until again it is attractive to relocate businesses there. The obvious happens, and businesses move to

Let's accept your premise. Assume the USA lowers taxes until again it is attractive to relocate businesses there. The obvious happens, and businesses move to the USA. Yay! But other countries don't appreciate this loss of business and retaliate by lowering their taxes. Businesses again leave. So the USA lowers theirs again, and so on and so forth. Eventually you hit a point where one country breaks and can lower their taxes no further, but everyone suffers, because taxes are now so low that revenue gained from the aforementioned business taxes is basically nothing. It's not a wise plan.

Alupis 12y ago
That is a very simplified view of how taxation works. There is quite a bit more to corporate taxes in American than just the percentage. The bothersome part is, people seem to think our country is just so great that businesses should want to pay ludicrous taxes here, almost like it's patriotic to pay higher tax rates among other things. Well, it's not.
jmulho 12y ago
That is a wise plan and it is exactly how it works. Every country charges exactly the highest tax they can charge without driving business away. But the tax rate is not the only thing the business has to consider. They have to consider stuff like labor costs, established case law, cost of regulatory compliance, likelihood of civil unrest, corruption, etc. If a country creates conditions are good for business then a country may be able to charge a higher tax without driving business away. Let’s accept your premise. Every country competes to provide the best business environment except one. One country doesn’t compete, on principal, because the result will be that “everyone suffers”. Now who suffers?
adventured 12y ago
That's obviously not how taxes work. If that was how taxes worked, everyone would move to Texas, Florida, Washington for the lack of state income taxes. And or every state in the US would have zero income tax. And every company on earth would be in Ireland. Or every country would already have 0% corporate income taxes by now. And the US would have lowered its corporate tax rates a very long time ago because they would have to in order to compete. And countries with high personal income taxes (eg France) would be 'forced' to lower their income tax rates to compete with low income tax rate countries. While you see relatively small scale effects like this, it is not as dramatic as you make it out to be. There would be no race to zero. In fact, there is zero evidence of your scenario having ever played out on a global scale in the past century of well monitored public economic data. If a race to zero were even possible, it would have already been forced into existence, as any variance would be enough to trigger the beginning.

Alupis 12y ago

That is a very simplified view of how taxation works. There is quite a bit more to corporate taxes in American than just the percentage. The bothersome part is, people seem to think our country is just so great that businesses should want to pay ludicrous taxes here, almost like it's patriotic to pay higher tax rates among other things. Well, it's not.

jmulho 12y ago

That is a wise plan and it is exactly how it works. Every country charges exactly the highest tax they can charge without driving business away. But the tax rate is not the only thing the business has to consider. They have to consider stuff like labor costs, established case law, cost of regulatory compliance, likelihood of civil unrest, corruption, etc. If a country creates conditions are good for business then a country may be able to charge a higher tax without driving business away. Let’s accept your premise. Every country competes to provide the best business environment except one. One country doesn’t compete, on principal, because the result will be that “everyone suffers”. Now who suffers?

adventured 12y ago

That's obviously not how taxes work. If that was how taxes worked, everyone would move to Texas, Florida, Washington for the lack of state income taxes. And or every state in the US would have zero income tax. And every company on earth would be in Ireland. Or every country would already have 0% corporate income taxes by now. And the US would have lowered its corporate tax rates a very long time ago because they would have to in order to compete. And countries with high personal income taxes (eg France) would be 'forced' to lower their income tax rates to compete with low income tax rate countries. While you see relatively small scale effects like this, it is not as dramatic as you make it out to be. There would be no race to zero. In fact, there is zero evidence of your scenario having ever played out on a global scale in the past century of well monitored public economic data. If a race to zero were even possible, it would have already been forced into existence, as any variance would be enough to trigger the beginning.